Pass pension reform, or else

June 14, 2013|By David McSweeney

Speaker Michael Madigan on the House floor at the State Capitol in Springfield Friday, May 31, 2013. (E. Jason Wambsgans )

In Springfield, the presence of Abraham Lincoln can always be felt. One of my favorite Lincoln quotes is "Leave nothing for tomorrow which can be done today." We should apply his advice to Illinois' most pressing issue today: pension reform.

As I say to hardworking teachers and state employees all the time, "I want to save your pensions, and the only way to do that is to reform the broken system."

Illinois is in grave financial condition and insolvent. We have $7 billion in unpaid bills, $100 billion in unfunded pension liabilities and a 9.3 percent unemployment rate. With Fitch Ratings and Moody's Investors Service dropping the state's credit grade, Illinois now has the lowest bond ratings in the country. Illinois' long-term tax-exempt bonds trade at more than double the borrowing spreads of California's long-term tax-exempt bonds. It will cost Illinois taxpayers much more to borrow money in the future. The increased costs will make it necessary to cut more spending for basic services and could give some politicians another excuse to raise taxes even higher. If we don't take action soon, I'm concerned that the downgrades will continue, and Illinois could potentially be unable to issue cost-efficient debt. If Illinois loses access to the debt capital markets, capital projects would be halted and the situation could spiral out of control.

In the House, we ended up adopting the pension reform bill sponsored by Speaker Michael Madigan. It's not a perfect bill, but it received strong bipartisan support and is a good first step. The bill would reduce unfunded pension liabilities by more than $20 billion and help stabilize the situation. It would protect existing benefits while limiting future cost-of-living adjustments, increase the retirement age for employees under 45 years old, increase employee contributions and impose a salary cap on pensions. In the bill's preamble, a strong case is made about why dramatic action is immediately required on pension reform. Based on my conversations with legal experts, I believe the bill will pass constitutional muster. Again, it should only be the first step in pension reform, and we need to work to transition public employees to defined contribution retirement programs so we don't continue to create the same problems in the future.

The Senate has adopted a weaker plan that contains significantly less cost savings. It relies on giving employees various choices, and unclear assumptions have to be made to determine the actual cost savings. I strongly believe the Senate's bill does not go far enough and will not save the pension systems or stabilize Illinois' financial situation.

I'm hopeful that our legislative leaders can find a way to reach agreement on a deal for the Senate to pass the Madigan-sponsored measure during Gov. Pat Quinn's special session next week. If they're not successful, it will then be necessary for the rank-and-file to band together to force the issue and do our jobs. If the governor doesn't sign a pension reform bill by June 30, I will file a bill to stop paying members of the General Assembly their salary until pension reform is passed. Sometimes it's necessary to take extraordinary measures to resolve a crisis.

State Rep. David McSweeney, R-Barrington Hills, represents the 52nd House District.